Which of the Following Statements Is False Regarding Consolidated Tax

question 10

Multiple Choice

Which of the following statements is false regarding consolidated tax returns?

• A)An affiliated group can file a consolidated tax return only if it elects to do so.
• B)To file a consolidated tax return,one corporation must own at least 50% of the stock of another corporation.
• C)For a group of corporations filing a consolidated tax return,an advantage is that losses of one group member may offset gains of another group member.
• D)For a group of corporations filing a consolidated tax return,losses from certain intercompany transactions are deferred until realized through a transaction outside of the group.

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Definitions:

Proprietorships

Business entities owned by one individual, where there is no legal distinction between the owner and the business.

Partnerships

A form of business organization in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a partnership agreement.

Cooperatives

Business organizations owned and operated by a group of individuals for their mutual benefit, where members democratically control the operations and profits are distributed according to each member's contribution.

Legal Taxable Entity

An organization or individual subject to tax laws, with an obligation to file tax returns and pay taxes based on income or transactions.